Suntory time! Spirits giant snaps up London gin distiller Sipsmith

Owner of Jim Beam, Yamazaki, Laphroaig and Courvoisier brands buys controlling stake in artisan distiller

Sipsmith’s master gin distiller Jared Brown the distillery in London.

Sipsmith’s master gin distiller Jared Brown at the distillery in Chiswick, west London.
Photograph: Suki Dhanda for the Observer

London gin maker Sipsmith has been swallowed up by Beam Suntory, the world’s third largest spirits company, as it tries to tap into surging demand for handcrafted tipples.

The owner of Jim Beam, Maker’s Mark, Teacher’s and Courvoisier is thought to have paid as much as £50m to buy out Sipsmith’s shareholders including Sam Galsworthy and Fairfax Hall, who founded the brand with Jared Brown just eight years ago.

All three will be staying on to run the business, which has 35 staff and will continue to run out of its traditional copper pot distillery in Chiswick, west London.

Galsworthy said Sipsmith already sold 30% of its gin overseas and demand was “growing like billy-o” in the US, Australia and northern Europe as well as Japan. He said teaming up with Beam Suntory would help the company achieve its aim of building a lasting brand.

“We have worked tirelessly to share our gin of the highest quality with discerning sippers,” said Galsworthy. “In this new chapter, we have found the perfect partners to take Sipsmith to all four corners of the globe.”

Sipsmith is one of hundreds of artisan distillers set up in recent years amid a growing trend towards smaller brands with an authentic back story. It claims to have pioneered a gin renaissance in London by starting up the city’s first copper distillery for nearly 200 years.

Sipsmith’s sales have risen by between 60% and 70% a year for the past two years as Brits have been quaffing gin in record amounts. This year 40m bottles were bought as a 19% rise in sales outstripped growth in sparkling wine, according to the Wine and Spirit Trade Association (WTSA).

That is part of an international trend which has led to gin exports rising at record levels. Sales to the US alone have soared 553% in the past decade, reaching £159m in 2015.

Jonny Forsyth, global drinks analyst at market analysts Mintel, said it was no surprise that Beam Suntory had bought Sipsmith as the major spirits producers recognised they faced a challenge from fast-growing craft brands.

“Millennial consumers, in particular, really value small batch heritage spirit brands rather than big brands with a more mainstream audience. It is a lot like the craft beer where we’ve seen big brands say ‘it’s time we bought these brands before they become big competition’.”

He said the buyout of craft gin Monkey 47 by Pernod Ricard in January marked the beginning of a trend which was likely to escalate, although there are few craft gin makers who have reached any serious scale.

Forsyth said major spirit companies were moving to buy out producers at a relatively early stage in their development, after letting craft beer startups gain market share before they began buying them up.

But he added: “It’s a risky thing to do as the younger consumer really demands authenticity from a brand. Sipsmith is still playing on its craft and smaller size and there’s a real disconnect with being part of one of the major spirits companies in the world.”

Galsworthy said he was confident that Beam Suntory would give the brand real independence and it would continue to produce its gin in exactly the same manner. He said he was “committed for life” to Sipsmith and while the current staff and founding shareholders, who include family and friends, would no longer hold shares in the company they had agreed long term financial incentives so they could share in its future success.

Matt Shattock, chairman and chief executive of Beam Suntory, said: “We really admire what [Sipsmith has] accomplished, and we’re very excited to team up with them to maximise the global potential of Sipsmith.”

A spirited history

Gin is thought to have been first produced in Italy, but gained popularity as a medicine in early 17th century Holland.

“Genever” was used a treatment for stomach complaints, gout and gallstones. It was flavoured with juniper to improve the taste and add medicinal properties.

Gin was popularised in the UK via British troops who were given the spirit as “Dutch courage” during the thirty years’ war. But the industry really boomed in the early 1700s after King William III loosened regulation.

Gin became so widely consumed that the amount sold daily began to exceed that of beer. It was a cheap drink consumed by the poor.

Attempts to control the market in the 1730s led to riots and failed to put a lid on growing sales. In 1750 the Gin Act finally restricted distribution by licensing spirit retailers. But Hogarth’s famous print Gin Lane produced in 1751 continues to show the dangers of addiction to the spirit.

Gin’s image first began to change in the 1850s when distillers opened gin palaces, luxurious drinking establishments designed to entice more well-off patrons. The gin and tonic was also born as Brits in colonial India mixed the spirit with sugar and lime to make taking quinine for malaria more palatable. Gin reached the peak of sophistication when mixed with vermouth to create the martini cocktail, chosen by Ian Fleming as the drink of choice – with vodka and shaken, not stirred – for fictional spy James Bond .

Leave a Reply